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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 421.29-0.5%Jan 16 4:00 PM EST

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To: TobagoJack who wrote (166153)12/18/2020 6:33:56 AM
From: Julius Wong  Read Replies (3) of 219525
 
Big swings expected as Tesla heads into S&P 500
Dec. 18, 2020 4:37 AM ET Tesla, Inc. (TSLA) By: Yoel Minkoff, SA News Editor 24 Comments

Index funds tracking the S&P 500 have a small window today to buy nearly $80B worth of Tesla (NASDAQ: TSLA) stock as the EV maker gears up to join the widely tracked stock index.

It's going to be a wild scene for investors in the minutes before Friday's close, and traders are also watching how the giant addition will ripple through the derivatives market, with big swings influencing options pricing.

Adding to the volatility, Tesla is easily the most traded stock on Wall Street, and has surged 50% since November (when its S&P debut was announced) and almost 700% year to date.

Helping to smooth out the addition is quadruple witching, which refers to the day that options and futures on both indexes and stocks expire simultaneously, and generally produces heavy volumes that can boost liquidity.

At over $600B, Tesla will become the most valuable company ever admitted to Wall Street's main benchmark, accounting for over 1% of the S&P 500 index.

Analysis: Bulls view Elon Musk as a visionary that can push the company's disruptive technology ahead of its competitors. They also see Tesla posting above-average gains due to increasing adoption rates in the global electric vehicle market and its solar energy business. Bears meanwhile focus on Musk's track record of missed production targets and corporate governance risk after he was forced to step down as chairman to settle fraud charges in 2018. They also cite an inflated P/E ratio, as well as a meteoric rise that has made Tesla the most valuable auto company in the world despite production that is a fraction of rivals.
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